Profits down and debts up at NR

Rail infrastructure company Network Rail (NR) has announced a much-reduced annual profit and an increase in net debt to £23.8 billion.

The company's operating profits, revenue and capital expenditure also fell in the 12 months ending March 2010.

But NR stressed that costs had been controlled, charges to rail companies had been cut and the number of trains on time had reached an annual record level.

The not-for-dividend company, which has no shareholders, made an after-tax profit of £284 million in 2009/10 - well down on the £609 million figure for 2008/09.

Net debt rose from £22.30 billion to £23.83 billion. But NR said its debt had a lower gearing (debt to regulated asset base) ratio of 64% - down from 70% - and that this was "well within permitted limits".

Revenue was £5.66 billion compared with £6.16 billion in 2008/09, while net operating costs were up slightly from £3.61 billion to £3.68 billion. This was largely due to higher (but lower than inflation) staff costs, NR said.

Operating profits were down to £1.98 billion from £2.54 billion, but the company said this was in line with terms laid down by the Office of Rail Regulation (ORR).

The results come a day after the ORR reported that NR had had a "mixed" year.

ORR boss Bill Emery said he had written to NR's remuneration committee urging it to take into account this mixed performance when considering top NR executives' bonuses which are due to be announced later this month.

Transport Secretary Philip Hammond has also expressed concern about the level of bonuses, writing to NR chairman Rick Haythornthwaite about the matter.